AC Treuhand and the facilitating of cartels

In a judgment of 22 October 2015 the European Court of Justice (Court) has ruled that a consultancy firm can be held liable for a breach of the cartel prohibition. This is the case when the consultancy firm actively and with professional knowledge contributes to the implementation or observance of a cartel agreement between companies working in a different market than the market in which the consultancy firm is operating.

The case
The case relates to two cartels in the field of heat stabilisers. The infringements established by the European Commission consisted of price determination, market sharing by means of sales quota, division of the customers and the exchange of sensitive commercial information, in particular about the customers, the production and sales.

AC Treuhand, a Swiss consultancy firm, had provided far-reaching assistance to the participants in both cartels with the organisation and chairing of meetings. AC Treuhand had detailed knowledge of the content of the cartel agreements and in fact had formulated and distributed all the information regarding prices, quota and customers. It was allowed to carry out audits in the offices of the cartel members. Only the data which had ultimately been approved by AC Treuhand could serve as the basis for the negotiations and the agreements. AC Treuhand had made its business premises available to keep the cartels hidden. According to the European Commission, it was the task of AC Treuhand to prevent the discovery of the two cartel infringements. As discussion leader, its role was to encourage the parties to come to an arrangement in order to make entering into cartel agreements possible.

The Commission imposed a fine of € 174,000 on AC Treuhand for the infringement of the cartel prohibition. The appeal lodged by AC Treuhand to the General Court was rejected by the ruling of 6 February 2014. AC Treuhand appealed against this to the Court.

The ruling of the Court
According to the Court, a firm has taken part in a cartel infringement as referred to in article 101(1) TFEU and is liable for the different elements of this infringement, if the relevant firm by its own behaviour has wanted to contribute to the realisation of the common objectives of all participants. In addition the relevant firm must have been aware of, or should reasonably have foreseen, the substantive conduct planned or implemented by other companies in pursuance of those objectives, and was ready to accept this risk.

For the infringement of the cartel prohibition it is not required that all parties operate on the same market and mutually restrict their freedom of action. It can also not be deduced from the case law of the Court that the cartel prohibition only relates to either companies operating on the market to which restrictions of the competition apply, to upstream or downstream markets of such, or to neighbouring markets. It is after all established case law of the Court that the cartel prohibition relates to all agreements and concerted practice which distort competition on the same market. The market in which the parties operate is not relevant in this. The same applies to the fact that only the commercial behaviour of one of the participating companies is affected by the cartel agreement. A different interpretation of the cartel prohibition would compromise its most important objective, namely the maintenance of undistorted competition within the communal market.

AC Treuhand had agued that it could not have foreseen that its actions could be viewed as an infringement of the cartel prohibition. By holding it liable for this cartel infringement, the Commission would therefore have acted contrary to the principle of legality. The Court rejects this defence. The law is also foreseeable if the relevant company must obtain expert advice in order to be able to assess the possible consequences of a certain act to a degree reasonable in the circumstances. This applies in particular to professionals who are used to showing great caution in the practice of their profession. It may therefore be expected of them that they assess the related risk with great care. The same applies therefore to AC Treuhand. In this, it is not relevant according to the Court that the judicial institutions of the EU at the time of the cartel infringement committed by AC Treuhand could not yet have been able to rule on the conduct of a consultancy firm such as AC Treuhand. The cartel prohibition has after all a wide area of application. In addition, the European Commission had in a decision of 17 December 1980 already ruled that a consultancy firm which had participated in the implementation of a cartel, had infringed the cartel prohibition.

According to the Court, AC Treuhand can therefore be held liable for participating in two cartels.

Comment
The current judgment is interesting for two reasons. Firstly because it – yet again – shows that the cartel prohibition has a particularly wide area of application. It is now definitively established that a company which only facilitates a cartel and is not active on the market to which the cartel relates can also be held liable for the infringement of the cartel prohibition. Three conditions apply here. The facilitating company:

wishes, by its own conduct, to contribute to the realisation of the cartel,

must be aware of the prohibited behaviour of the other participants in the cartel or must have reasonably been able to foresee this behaviour, and

must have been prepared to accept the risk of the infringement of the cartel prohibition.

This means that in certain cases a broad range of advisors and other service providers could now come in sight of the competition authorities if they are involved in any way in a cartel. Furthermore, the Authority for Consumers and Markets (ACM) has in the past already imposed fines on cartel supporters such as in the paprika case and the barracks cases.

The second interesting point is that it is expected from professional parties that they observe a great deal of caution. They must always consider whether their actions are permitted under competition law. Legal advice might have to be obtained. The Schenker case shows however that it is not possible to avoid a fine from the European Commission if action was taken on the basis of – in hindsight – incorrect advice from a lawyer or national competition authority. In view of the wide application area of the cartel prohibition the best advice is; when in doubt, abstain. In any event, testing the limits can be a risky business.

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